Why Critics of Roger Goodell's Increased Player Fines Don't Understand the NFL as a Business

In 2012, NFL players doled out a total of $2.87 million in fines, the highest mark in the past decade. According to Justfines.com, a website that tracks this data, leaguewide fines are increasing in both frequency and severity.

Goodellian economicsTake last year, for example. The NFL levied 160 fines on its players, with the highest being a $55,000 penalty on then Baltimore Ravens safety Ed Reed for a shoulder-to-head hit on the New York Giants' Victor Cruz.

Compare these numbers with those reported in the five-year span between 2001 and 2005. During this period, the league issued a total of 124 fines, averaging about $700,000 annually.

Why is this time frame important? Because Roger Goodell became the NFL's new commissioner at the beginning of the 2006 season. Since Goodellian economics (that's what I'm calling it) became the law of the NFL, the number of fines given each year has increased by more than 600%, and the average value of each fine has risen by about 20%. The largest ever fine for an on-field incident was given earlier this season, when Detroit Lions tackle Ndamukong Suh was forced to pay $100,000 for an illegal block.

Where does the money go?The question you're probably asking is: Where does the money go? If repeat offender Mike Mitchell, a safety with the Carolina Panthers, is to be believed, NFL fine money goes "right in Roger [Goodell]'s pocket."

Obviously, that wouldn't fly with the NFL Players Association. In the face of similar criticism a few years ago, the league released a communiqué that revealed the following information (emphasis mine):

All on-field fine money collected by the NFL is used for charitable purposes. These funds have been used to support retired player programs, including the NFL Player Care Foundation [P.C.F.] and NFLPA Players Assistance Trust [P.A.T.]; disaster relief initiatives; and health-related charities.

While there's no comprehensive list of the charities that accept fine money aside from the P.C.F. and the P.A.T. (which takes in at least 25% of all fines each year), it has been reported that the Partnership for Clean Competition, the Brian Piccolo Memorial Fund, and the Lombardi Comprehensive Cancer Center are regular recipients. It is intriguing to see that everything from anti-doping to cancer research is supported by NFL on-field antics, and it's also important to understand that P.A.T. grants are given to an extensive list of charities in their own right.

Mixed opinionsAs you'd expect, opinions are mixed on the increased usage of fines by the NFL. In theory, the aim of Goodellian economics is to increase player safety. Goodell has stressed time and time again that one of his primary goals as NFL commissioner is to cut down on injuries that affect players' lives post-football.

Between 2011 and the end of the 2012 season, the number of leaguewide concussions dropped by 40%, and thus far this season, reported head injuries are down year over year. It appears that Goodell's quest to improve the health of the NFL is working.

But that doesn't mean everyone is on board. Former Ravens linebacker Ray Lewis has expressed his concerns before, asserting that the game is too fast to expect players to avoid dangerous tackles 100% of the time.

Fellow Raven Jameel McClain has likened the current direction of the NFL to "flag football," adding that any further loss in physicality may lead fans to stop watching. In fact, Goodell holds just a 39% player-approval rating, according to a recent USA Today poll, so it appears many players share a similar sentiment.

The money is flowing inThe assertion that the NFL is reliant on high-impact collisions is a noble one, but ultimately unsupported by the numbers. Since 2006 when Goodell took office, league revenue has increased from $6 billion to $9.5 billion. Although exact data isn't reported, the SportsBusiness Journal estimates that TV rights deals and online licensing are two areas most responsible for this expansion.

With player safety efforts and aggregate revenues on the rise, Goodell has stated that he wants to hit the $25 billion mark by 2027. This implies he's seeking slightly quicker annual revenue growth (10.9%) than the league has averaged since he became commissioner (8.3%). As Forbes recently pointed out, fantasy sports and mobile streaming are a couple X-factors that can help the NFL reach this target.

With regard to the latter, the league's $1 billion NFL Mobile deal with Verizon Communications (NYSE: VZ) to stream Sunday afternoon games is a good start. Goodell has told sources that he views this framework as a stepping-stone toward the development of an in-house mobile network.

The league's fantasy football offering, meanwhile, is a small but valuable stake in an industry that's been booming. The Fantasy Sports Trade Association estimates that 2012 spending in this arena reached $1.6 billion after registering $800 million in 2008, and the industry's size of nearly 26 million users has grown by 13-fold since 2000.

The NFL's own fantasy football game holds approximately 10% of this market, respectable compared to ESPN and majority owner Disney (NYSE: DIS) , and Yahoo! (NASDAQ: YHOO) . Each site has over 10 million players, but both are a decade older than the NFL's fantasy game, which was established in 2010.

The future is white-hotGoing forward, the proliferation of fantasy football is a crucial factor that can aid the NFL's growth outlook, and mobile streaming is an area that shouldn't be overlooked. Roger Goodell's $25 billion revenue target may seem outlandish today, but the league must only up its expansion by a few ticks to reach that number. It's clear that the increased frequency of big-money fines hasn't bothered fans one bit.

While Goodellian economics appears to benefit charities and anger defensive players, it also preserves the game's offensive spark that drives the interest of many football addicts. Put simply, defense may win championships, but offense generates fan interest. With revenue booming and the NFL already claiming the title of America's highest-grossing sports league, the future is very bright.

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